It’s not exactly a huge secret that a small business can have a pretty hard time in getting financing. Before you approach any lenders, sit down and ask yourself: how can I increase my chances of being approved credit?
Five quick and easy things that you do to improve your odds:
Demonstrate that your business can and does generate a steady flow of cash
Content isn’t king, cash is. It is also a very good indicator of the wealth of a business and its future prospects. By being able to show that you have a steady stream of income, or that you are well placed to make that happen, you are telling potential lenders that you will be able to pay off loans. Not only that but pay your staff and anyone else. If there is some doubt in your own mind about this, there are options such as bad credit secured loans that you could look at.
The way that you can show potential lenders and investors this, is by providing financial statements, bank statements, tax returns. These provide empirical proof of your ability to make money with your business, or that you have enough funds to ride out the wait for the profits to begin being made.
Maintain debt level that you can manage
Debt is inevitable if you take a loan, and you need to ensure that you able to manage the load that you have to take on. You are going to have to show that you can not only handle the debt that you already have, if any, but also that you can pay back the loan. If the loan is to further your business, by the way of expansion for example, then you may need to show why this new debt will help. When someone finances a company, they usually like to know how their money is being spent.
Your payment history needs to be a positive one
One of the first things that a potential financier is going to look at is your payment history. Anybody, or company, wants to see that a business has a good record of keeping up with repayments and paying off debts. This could include a credit history report, obtained by a third party. If this is true, they should have informed you about it first. You need to ask to see it, to make sure that it is accurate.
Show your good business judgement
Any lender worth the money they are about to hand over will want to know that you can run a business successfully. This means anticipating challenges, executing plans to overcome or avoid them. They may also be interested in whether or not your managers are upto the challenge also – this is especially true for smaller businesses.
Shop around before choosing a lender
Investors take their time before choosing a business to invest in, and for a for a very good reason. You need to do the same for similar reasons as them. They want to know that you can pay back, and can earn themselves some interest in return. You need to know that their interest rates and terms are achievable for you and your business.
Take your time, do your research and you should not have any difficulty.